Banking News
- Shanghai Pudong profit climbs 31 percent
Date: 9-Jan-2007 Sources: (Shenzhen Daily)
SHANGHAI Pudong Development Bank Co., part-owned by Citigroup Inc., said earnings jumped 31 percent in 2006 from a year earlier.
Net income at the Shanghai-based national bank rose to 3.35 billion yuan (US$429 million) from 2.56 billion yuan, it said in a summary statement of unaudited results yesterday.
'The bank has been benefiting from a rise in lending and widening interest rate spreads,'said Liu Xiaochang, a Nanjing-based analyst at Huatai Securities Co. 'The results slightly beat our estimate.''
Outstanding loans in China's currency rose 14.8 percent in November from a year earlier to 22.3 trillion yuan, according to figures from the central bank. That's helping Shanghai Pudong and rivals earn more interest income. The bank, which raised 6 billion yuan in November by selling new stock, has abundant capital to support its lending growth, Liu said.
Loans expanded 17 percent in the first nine months from the end of last year, pushing the capital adequacy ratio near the 8 percent minimum. Money raised in the share issue will allow it to expand the credit card business and lending.
Operating income rose 26 percent to 29.6 billion yuan, the statement said. Earnings per share rose 18 percent to 0.77 yuan.
Non-interest income from providing custodian and fund distribution will increase rapidly this year, Liu said.
'Shanghai Pudong is adjusting its business mix and fee-based income will become important,'' she said.
The statement didn't break down sources of revenue or give a figure for the bank's interest rate spread. While the central bank raised its one-year lending rate twice last year by a total of 0.54 percentage point to 6.12 percent, it lifted the one-year deposit rate by 0.27 percentage point, allowing lenders to profit from the widening spread.
Citigroup owns 3.8 percent of Shanghai Pudong, down from 5 percent because of dilution from the share sale. The U.S. bank may raise its stake close to the maximum allowed for a foreign investor, Shanghai Pudong deputy president Ma Li said.
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